Commercial Banking Functions Quiz

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What is the purpose of discounting of bills?

To sell outstanding invoices at a discounted price to a third-party financier

Which department focuses on meeting the needs of individuals for bank accounts and credit cards?

The Personal Banking Services Department

What does the Investment and Financial Planning Department help clients achieve?

Their financial goals through investment and financial planning services

Match the following types of deposits with their descriptions:

Fixed deposits = Accounts with a specific maturity date and interest rate Current or demand deposits = Accounts that allow frequent withdrawals and deposits Savings Deposits = Accounts designed to encourage saving and offer interest Cash credit = A loan facility extended to bank customers

Match the following types of loans and advances with their descriptions:

Cash credit = A loan facility extended to bank customers Overdraft = Allows customers to withdraw more money than is available in their account Ordinary or clean Loan = Standard loans with no specific purpose Discounting of bills = Advancing money against bills of exchange

Match the following functions of a bank with their descriptions:

Acceptance of deposits = Collecting savings from individuals and offering interest Providing Loans and advances = Extending credit facilities to customers Earning interest = Generating revenue from lending activities Avoiding the damage of theft = Protecting customers' savings from theft or loss

Match the following loan types with their descriptions:

Ordinary or clean loans = Typically have lower interest rates High-risk loans = Have higher interest rates

Match the following banking departments with their descriptions:

Personal Banking Services Department = Meets the needs of individuals for bank accounts and credit cards Corporate Banking Department = Focuses on meeting the needs of companies and institutions

Match the following financial services with their descriptions:

Credit and Loan Department = Handles loan and credit applications from customers Investment and Financial Planning Department = Helps clients achieve their financial goals through investment and financial planning services

Match the following financial transactions with their descriptions:

Discounting of bills = Involves selling outstanding invoices to a third-party financier at a discounted price Invoice discounting = Also known as discounting of bills

Match the type of deposit with its description:

Fixed Deposit Accounts = Require money to be deposited for a fixed period and cannot be withdrawn early. Current Deposit Accounts = Are for traders and businessmen who make frequent payments and do not earn interest. Savings Deposit Accounts = Aim to encourage small savings and have restrictions on withdrawals. Cash Credit Accounts = Allow the bank to make payments exceeding the available balance, resulting in a negative bank balance.

Match the type of loan with its characteristics:

Overdraft = Occurs when a purchase or check exceeds the available balance, resulting in a negative account balance. Ordinary or clean loan = Considered low risk for the lender and typically requires a good credit history, stable income, and collateral. Cash credit = Allows payments exceeding the available balance. Default = In the event of this, the lender can seize the collateral and sell it to recoup their losses.

Match the loan requirement with its description:

Ordinary or clean loan = Requires the borrower to have a history of repaying debts on time, a stable and reliable income, and pledged collateral. Cash credit = Requires the bank to make payments exceeding the available balance, resulting in a negative bank balance. Overdraft = Requires a purchase or check to exceed the available balance, resulting in a negative account balance. Seizure of collateral = Occurs in the event of default, allowing the lender to recoup their losses.

Study Notes

Bank Deposits and Loans Summary

  • The bank accepts three types of deposits: fixed deposits, current deposits, and savings deposits.
  • Fixed Deposit Accounts require money to be deposited for a fixed period and cannot be withdrawn early. The longer the period, the higher the interest rate.
  • Current Deposit Accounts are for traders and businessmen who make frequent payments and do not earn interest. They have to pay incidental charges to the bank.
  • Savings Deposit Accounts aim to encourage small savings and have restrictions on withdrawals. They offer a low-interest rate compared to fixed deposits.
  • Cash Credit Accounts allow the bank to make payments exceeding the available balance, resulting in a negative bank balance.
  • Overdraft occurs when a purchase or check exceeds the available balance, resulting in a negative account balance.
  • An ordinary or clean loan is considered low risk for the lender and typically requires a good credit history, stable income, and collateral.
  • Cash credit and overdraft are types of loans and advances provided by the bank.
  • Cash credit allows payments exceeding the available balance, while overdraft results in a negative balance in the account.
  • An ordinary or clean loan is low-risk for the lender and requires a good credit history, stable income, and collateral.
  • These loans typically require the borrower to have a history of repaying debts on time, a stable and reliable income, and pledged collateral.
  • In the event of default, the lender can seize the collateral and sell it to recoup their losses.

Discover the key functions of commercial banks with this quiz. From accepting various types of deposits to providing loans and advances, test your knowledge of banking operations and terminology.

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